FTC to Investigate “Patent Trolls”

The U.S. Federal Trade Commission is expected to announce today that it will investigate patent-assertion entities (also known as “patent trolls”), companies that buy up technology patents and then sue others for infringement. FTC Chair Edith Ramirez will ask the full commission to approve a planlawsuit2 150x150 FTC to Investigate “Patent Trolls” that includes subpoenas to known patent trolls. The move follows executive orders by President Obama for several federal agencies to move to “protect innovators from frivolous litigation.”

Patent-assertion entities (PAE) usually have no product or service, but operate solely to collect royalties on patents they have purchased. More than 60% of patent lawsuits in the United States are filed by PAEs; that figure was 29% just two years ago. “The patent-troll business has grown rapidly in recent years as the Patent and Trademark Office has issued a growing number of technology patents and as ever-more-complex devices like smartphones have become big consumer items,” according to The New York Times.

The FTC is expected to look into how PAEs conduct their business, whether they turn proceeds from lawsuits back to the original patent owners, if they coordinate lawsuits, etc. Defenders of PAEs say they enhance innovation by offering a secondary market for patents that encourage inventors to take more risks. But some PAE lawsuits have been deemed frivolous, such as one cited by the Times in which a coffee shop was sued for providing Wi-Fi to its customers. Many business owners choose to settle with patent trolls rather than face the expense and hassle of a lawsuit.

Read the entire article in The New York Times.

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About Katherine Hutt

Katherine R. Hutt, Director of Communications and Media Relations with the Council of Better Business Bureaus, is an award-winning communicator who has been helping nonprofit organizations tell their stories for the past 25 years. She was a CBBB consultant on numerous projects for more than a decade before joining the staff in 2011.